Gov. Cuomo Proposes Study of Recreational Marijuana Legalization

Gov. Andrew Cuomo wants New York to fund a study of the possible impact of legalizing recreational marijuana in the state, the Democratic governor said at his annual budget address in Albany on Tuesday afternoon. He also introduced several other proposals including a possible surtax on pharmaceutical company sales of opioid medications, and a tax on companies that sell over the internet.

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New York Gov. Andrew Cuomo gives his 2018 State of the State address. Photo Credit: The Associate Press/Hans Pennink

ALBANY—New York Gov. Andrew Cuomo wants New York to fund a study of the possible impact of legalizing recreational marijuana in the state, the Democratic governor said at his annual budget address on Tuesday afternoon.

The governor also proposed requiring companies that sell more than $100 million annually to collect sales taxes on items they sell and proposed imposing an “opioid epidemic surcharge” on prescription opioid medications. He also signaled that he would make an exception for a 2 percent spending cap for courts provided that judges certify they’ll keep courtrooms open until 5 p.m. to alleviate a backlog of cases.

“Marijuana—things are happening,” Cuomo said, proposing a study by the state Department of Health to determine the health and economic impacts of legalizing the drug, which is already legal for certain medical purposes in the state.

The proposed study would also determine the criminal justice impact and consequences to New York state from legalization occurring in neighboring states, according to the governor’s budget PowerPoint presentation.

Details on the study remain scarce, although the governor said the panel charged with conducting it would include representatives of state police to get the “facts” on marijuana legalization.

U.S. Attorney General Jeff Sessions’ decision earlier this month, however, to rescind Obama-era guidelines for relatively lenient enforcement of federal marijuana laws in states that have legalized cannabis has cast a shadow over state laws legitimizing medical and recreational marijuana and the cannabis industry.

“New Jersey may legalize marijuana. Massachusetts already has. On the other hand, Attorney General Sessions says he’s going to end marijuana in every state. So you have the whole confluence of different information,” Cuomo said during his presentation to the Legislature. “I think we should fund [the Department of Health] to do a study. Let them work with state police and other agencies. Look at the health impact and economic impact,” he said during his address.

“If it was legalized in Jersey and it was legal in Massachusetts and the federal government allowed it to go ahead, what would that do to New York, because it’s right in the middle? This is an important topic, it’s a hotly debated topic, pardon the pun, and it’d be nice to have the facts in the middle of the debate once in a while,” Cuomo added.

Following Cuomo’s budget presentation, his budget director, Robert Mujica, said there’s no “specific funding amount” slated for the study.

“What are the ramifications of having states around you have [marijuana] programs?” Mujica said, noting that there may be “leakage” of marijuana in New York from surrounding states that have approved the recreational use of the drug, as well as “criminal justice impacts.”

The proposed study would be part of the negotiations with both houses of the Legislature. A final spending plan is due by April.

The study proposed by the governor would be run by the Department of Health, which is charged with running the state’s fledgling medical marijuana program.

New York’s medical marijuana program, signed into law by Cuomo in 2014, has struggled in its first few years of operation. The Cuomo administration had anticipated a $4 million annual revenue from a 7 percent excise tax when the medical marijuana program began in 2016. As of November, the state had collected $912,000 for the fiscal year—which began in April—putting it on track to surpass the $1 million revised revenue projection.

Neighboring Massachusetts legalized recreational marijuana, following a ballot initiative, in December 2016. The Massachusetts Department of Revenue estimates that taxes on recreational marijuana could rake in between $44 million and $82 million in the next fiscal year.

New Jersey, which has its own medical marijuana program, also is considering legalizing the drug. Newly sworn-in Gov. Phil Murphy, who campaigned on legalizing marijuana, has said he’d sign such legislation if a bill is passed by the state Legislature. In Colorado, where recreational use of marijuana became legal in January 2014, the state received $247 million in 2017 from marijuana taxes, licenses and fee revenue, according to the Colorado Department of Revenue.

Assemblyman Richard Gottfried, a Manhattan Democrat who is one of the architects of the state’s medical marijuana program and has sponsored a bill to legalize the drug in New York, said there’s already evidence available favoring legalization.

“I and many other legislators believe there is already ample evidence that allowing regulated, adult marijuana use makes sense and would help end a criminal law policy that destroys tens of thousands of lives. Legislation should be enacted now. But if a commission helps make that happen, that would be a good thing,” said Gottfried, the longtime chair of the Assembly’s health committee. Gottfried also has called on Congress to enact a law legalizing marijuana nationally.

The proposal to study recreational marijuana comes as New York faces a $4.4 billion budget deficit, where the governor and legislature are looking to shore up revenue.

Among other measures proposed by the governor Tuesday:

Tax Actions

In an effort to line the state’s coffers, Cuomo proposed several “tax actions” that would amount to $1 billion in new taxes and fees, which includes a sales tax on items sold over the internet by companies that sell more than $100 million annually—such as Amazon—and an “opioid epidemic surcharge,” which would impose on pharmaceutical companies a 2 cents per milligram surtax on opioid medications.

“With a $4 billion deficit, you can’t possibly get anywhere near where you want to be on education and health care unless you raise revenues. It’s just too big a deficit, and the choice of cutting education or cutting health care I don’t think is a place that anybody wants to go this year,” the Democratic governor said.

Senate Majority Leader John Flanagan, a Republican from Long Island, told reporters Tuesday afternoon following the budget address that his members would not be supportive of the governor’s plan to raise revenues through new taxes and fees.

Cuomo’s outline for his $168.2 billion budget did not delve into details on his plan to restructure the state’s tax code. A report by the Department of Tax and Finance, which will include a shift from income taxes to a payroll tax, will be released later this week, the governor said.

Cuomo said he’s willing to go above his 2 percent spending cap, giving the judiciary an increase of 2.5 percent, if judges can certify that courtrooms will remain open until 5 p.m. in an effort to cut down on backlogs.

“The backlog of cases is tremendous, especially in downstate New York. We have a chronic problem with people in Rikers Island who have been there for years who haven’t had their day in court. The judiciary wants a budget increase. The people of the state of New York have the right to know that the courts are opened. … You have courthouses that are, literally, at one o’clock—the place shuts down. The judges have to certify that the courtrooms are actually operating nine to five,” Cuomo said.

A spokesman for the state’s unified court system said that the governor’s proposed amendment to the state judiciary law isn’t needed.

“We appreciate the governor’s comments regarding the judiciary budget, however, the governor’s proposed amendment to the state judiciary law is not necessary,” spokesman Lucian Chalfen said in an email. “Judges of the Unified Court System have difficult jobs and work tirelessly. Any issues of judges’ attendance that have come to our attention are identified and promptly dealt with. This is exactly what we have been addressing over the last two years with the chief judge’s Excellence Initiative.”

This story has been updated with additional information.

Josefa Velasquez

Josefa Velasquez is a regulatory and Court of Appeals reporter for the New York Law Journal based in Albany, N.Y. Contact Josefa Velasquez at jvelasquez@alm.com. Twitter: @j__velasquez

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